Negotiation has been called the “preeminent mode of dispute resolution,” which makes sense considering how often people negotiate on a daily basis. While most people think only of formal agreements in a business setting when they think of negotiations, we negotiate all the time – when we try to agree with friends on where we want to go out to lunch, for example, or when spouses debate about what preschool is best for their child.
While negotiation is a great starting point in the dispute resolution process, there are some disadvantages of negotiation that limit its effectiveness in some situations. For example, while the ideal outcome of negotiation should be to find a win-win strategy that will work for everyone, some parties enter negotiations solely hoping to make the other party suffer, even if that means agreeing on a lose-lose situation.
Parties entering negotiations in bad faith is only one potential disadvantage that can occur in negotiations. In cases like this, negotiation might not be the best form of dispute resolution for the parties.
Ideally, parties should have equal power in a negotiation, but when one party has drastically less power, this can make negotiations problematically one-sided. Consider a situation where an uneducated man with no lawyer tries to negotiate with a massive corporation with a whole team of high-paid attorneys. With no safeguards to protect his rights, the man will be unlikely to come to a fair agreement with the firm.
Unequal power can even be a problem if the outcome is fair and offers all the benefits of a win-win negotiation. Imagine that the company in the previous example actually does want to help the man and agrees to a more-than-fair settlement. Even if both parties are happy and benefit from the outcome, outsiders who view the circumstances of the negotiation will assume the man was cheated due to the inequality of the parties involved.
Unlike court decisions or binding arbitration, negotiations are voluntary, which means either party can leave the negotiation at any time. While this is usually a good thing because it provides a level of trust and dedication to the proceedings, it can also cause problems.
If two companies are about to come to an agreement about a business partnership after months of negotiation, for example, and then one of the companies suddenly decides they no longer want to partner, then all the time, money and effort that went into the negotiations have been completely wasted.
Sadly, this is the reason we don't have world peace. If there was an easy, agreeable solution to every problem, then all problems would easily be solved already. If two parties are divided by drastically differing ideologies that leave no room for concessions or no willingness to make concessions, then no one can win in negotiations.
There is no negotiable compromise between a nonprofit who insists that drilling for oil in wetlands will destroy the native nesting area of an endangered stork species, for example, and the company that wants to drill for oil in the wetlands. That's why cases like these often end up in court where one party completely loses and the other wins entirely or where the court comes to a decision neither party is satisfied with.
There are many ways negotiation can be used as a stalling tactic and these can all harm one or more of the negotiating parties. For instance, a company could negotiate with a potential competitor about how to share a limited resource, knowing they are going to get a massive investment by a large corporation that will give them the financial backing they need to get the entire resource, letting them cut their competitor off completely.
Alternatively, a company can draw out negotiations with someone who could sue them knowing that the statute of limitations for a lawsuit will soon run out, leaving the other party with no legal recourse.